Series 65 Vocabulary
Insured Deposits - correct answer ✔✔Deposits that are held as cash in a bank or credit union that are
insured against loss by another company
Demand Deposit - correct answer ✔✔Deposits from checking and savings accounts which can be
demanded at any time without advanced notice
Certificate of Deposit (CD) - correct answer ✔✔Savings certificate promising the holder of the CD a
specific rate of interest
Money Market Instruments - correct answer ✔✔Short maturity debts issued by governments, large
companies, and financial institutions
Commercial Paper - correct answer ✔✔Money market instrument characterized by a short duration and
an unsecured nature
Individual - correct answer ✔✔A singular person that invests for him or herself
Sole Proprietorship - correct answer ✔✔A business that is formed by the owner and not structured as a
limited liability corporation, but a sole proprietorship, may report it's income and losses on the individual
owner's income tax returns.
General Partnership - correct answer ✔✔Business venture in which two partners or more accept liability
for debts accepted by the business, personal assets are at stake
Limited Partnership - correct answer ✔✔Business venture in which general partners manage the
business and assume liability for the company's debt, but the partners are only liable for up to the
amount of their investment
,Limited Liability Company (LLC) - correct answer ✔✔Business venture in which the owners are limited in
their liability regarding the company's debt, non taxable entity
C-Corporation - correct answer ✔✔Business structure by which the company itself is made into a legal
person and assumes all legal and financial liabilities, revenues are taxed to the corporation
S-Corporation - correct answer ✔✔Business structure in which the company itself is made into a legal
person and assumes all legal and financial liabilities, no more than 100 investors can be involved,
revenues are passed on to the investors and not taxed at the corporate level
Trust - correct answer ✔✔Legal arrangements by which investors may protect their assets, trustee is
assigned to carry out the deceased's wishes in accordance with trust documents and make the passing
of wealth and assets an easier transition
Estate - correct answer ✔✔The property left behind by a deceased person, the deceased need to leave
behind details or it will go to a probate court where the decedent's assets and heirs will lose value and
money respectively
Determining A Client's Financial Goals - correct answer ✔✔All objectives are essential to consider. These
objectives may have a long time horizon, such as retirement, or a shorter time horizon, such as saving for
a child's education.
Client's Time Horizon - correct answer ✔✔Period of time in which the assets are to be invested. Knowing
he time horizon is essential for providing suitable investment advice. Shorter time horizon warrants more
conservative investments while a longer time horizon warrants more aggressive investments.
Client's Risk Tolerance - correct answer ✔✔Many factors are important to be considered, time horizon is
one of the more important considerations. Investor personality is also a factor in the risk tolerance.
Client's Investment Profile - correct answer ✔✔A multifaceted look at the client's current situation and
goals. Factors the advisor must be aware of: current income, goals regarding investment, plans regarding
their eventual death, possible disability, time horizon, risk tolerance, cash flows, balance sheet of assets,
existing investments, tax situation, values, attitude, experience, level of sophistication, and
demographics.
,Client's Income Needs - correct answer ✔✔Current income and the need for current income, if needs
are being met by current occupation.
Retirement - correct answer ✔✔When determining how to invest retirement funds, the advisor needs to
know the time horizon, the length of time the investor needs the money, how to ensure it will last the
length of the entire time horizon. Also important to know whether the client desires a high level
spending in retirement or to maintain their current spending in retirement. High level of
spending=aggressive investment while current level of spending=conservative investment.
Eventual Demise - correct answer ✔✔Clients can prepare for eventual demise by purchasing life
insurance and participating in estate planning, and possibility setting up a trust. Life insurance policies
can help beneficiaries cope with the loss of income caused by the death. Estate planning helps ensure
that the deceased's wishes are fulfilled with minimal loss of assets due to taxation and legal fees.
Disability - correct answer ✔✔Many investors experience disability at some point in their life, this can
involve loss of income, which can endanger assets that guarantee financial liabilities. Disability insurance
is a policy that helps the insured cope with the loss of income resulting from disability by providing
payments to the injured party, usually for a specific period of time.
Cash Flow - correct answer ✔✔The clients need for cash should be regularly discussed to ensure current
needs are being met and future needs will be met. Ensuring present and future cash flows should be
considered with every decision the client makes as it is part of the fiduciary responsibility of the advisor.
Investing Needs - correct answer ✔✔The client's balance sheet is a summary of the client's net worth as
related to their assets and liabilities. The advisor can use to balance sheet to determine the solvency of
the investor and make a suitable judgment as to their needs involving investing and financial planning.
Sheet can also be used to show why the advisor gives certain financial advice to the client.
Existing Investments - correct answer ✔✔The advisor needs to be aware of the investor's current
holdings. This helps to make more informed advice and decisions, while also ensuring that the investor is
receiving all the benefits that the current holding has to offer.
Tax Situation - correct answer ✔✔Every client has a different tax situation. Knowing the specific situation
is vital. It's important to know which types of investments are tax advantaged and which are not. It is
also essential to know the client's adjusted gross income and their respective tax brackets. If the client is
at the edge of a bracket, money can be rearranged to pay the smallest fee possible.
, Investment Advice - correct answer ✔✔Advice is dependent on what the investor seeks from investing:
maximum return on outlay of capital, or only investing in moral markets and companies. Also the
investor's background: investing experience, sophistication, and the investor's attitude toward current
world events and political environments.
Treasury Bills (T-bills) - correct answer ✔✔money market security: short-term debt issued by the United
States government; maturities of 1,3, or 6 months; denominations of $1000; greatest amount
purchasable at one time is $5 million; issued at discount to par and redeemed at par by the US gov; no
interest payments are made; interested rate earned is calculated by difference is price paid at issue and
price paid once redeemed; very safe and liquid; highly desirable; low rates of return
Treasury Notes - correct answer ✔✔medium-term debt obligations issued by the United States
government; maturity dates range between one and ten years; issued at a par value with a fixed rate of
interest; in the fixed income sector of the market; interest rate debt determined through a competitive
bidding process; high demand in the secondary market; very liquid
Treasury Bonds - correct answer ✔✔bear the longest maturity of any treasury security; issued at par
with a fixed interest; maturities of greater than ten years; fixed interest rate determined through a
competitive bidding process; backed by the full faith and credit of the US gov; some of the safest bonds
available
FNMA (Federal National Mortgage Association) - correct answer ✔✔government-sponsored, publicly-
traded company; goal to make homeownership possible for lower-income families; buys and guarantees
mortgages, creating mortgage-backed securities which are resold and tradable; relatively safe and very
liquid; desirable for several classes of investors
Treasury Inflation Protected Securities - correct answer ✔✔debt securities that are issued by the United
States government; inflation protected because they are indexed to the currency consumer price index
(CPI) to prevent loss of purchasing power due to inflation; the par value of TIPS increases each time the
CPI rises, while the fixed interest rate remains the same
Governmentally Backed Bonds - correct answer ✔✔bonds secured by a specific government's ability to
tax it's constituency; very safe, highly rated investment; risky investments are with an unstable region or
government
Insured Deposits - correct answer ✔✔Deposits that are held as cash in a bank or credit union that are
insured against loss by another company
Demand Deposit - correct answer ✔✔Deposits from checking and savings accounts which can be
demanded at any time without advanced notice
Certificate of Deposit (CD) - correct answer ✔✔Savings certificate promising the holder of the CD a
specific rate of interest
Money Market Instruments - correct answer ✔✔Short maturity debts issued by governments, large
companies, and financial institutions
Commercial Paper - correct answer ✔✔Money market instrument characterized by a short duration and
an unsecured nature
Individual - correct answer ✔✔A singular person that invests for him or herself
Sole Proprietorship - correct answer ✔✔A business that is formed by the owner and not structured as a
limited liability corporation, but a sole proprietorship, may report it's income and losses on the individual
owner's income tax returns.
General Partnership - correct answer ✔✔Business venture in which two partners or more accept liability
for debts accepted by the business, personal assets are at stake
Limited Partnership - correct answer ✔✔Business venture in which general partners manage the
business and assume liability for the company's debt, but the partners are only liable for up to the
amount of their investment
,Limited Liability Company (LLC) - correct answer ✔✔Business venture in which the owners are limited in
their liability regarding the company's debt, non taxable entity
C-Corporation - correct answer ✔✔Business structure by which the company itself is made into a legal
person and assumes all legal and financial liabilities, revenues are taxed to the corporation
S-Corporation - correct answer ✔✔Business structure in which the company itself is made into a legal
person and assumes all legal and financial liabilities, no more than 100 investors can be involved,
revenues are passed on to the investors and not taxed at the corporate level
Trust - correct answer ✔✔Legal arrangements by which investors may protect their assets, trustee is
assigned to carry out the deceased's wishes in accordance with trust documents and make the passing
of wealth and assets an easier transition
Estate - correct answer ✔✔The property left behind by a deceased person, the deceased need to leave
behind details or it will go to a probate court where the decedent's assets and heirs will lose value and
money respectively
Determining A Client's Financial Goals - correct answer ✔✔All objectives are essential to consider. These
objectives may have a long time horizon, such as retirement, or a shorter time horizon, such as saving for
a child's education.
Client's Time Horizon - correct answer ✔✔Period of time in which the assets are to be invested. Knowing
he time horizon is essential for providing suitable investment advice. Shorter time horizon warrants more
conservative investments while a longer time horizon warrants more aggressive investments.
Client's Risk Tolerance - correct answer ✔✔Many factors are important to be considered, time horizon is
one of the more important considerations. Investor personality is also a factor in the risk tolerance.
Client's Investment Profile - correct answer ✔✔A multifaceted look at the client's current situation and
goals. Factors the advisor must be aware of: current income, goals regarding investment, plans regarding
their eventual death, possible disability, time horizon, risk tolerance, cash flows, balance sheet of assets,
existing investments, tax situation, values, attitude, experience, level of sophistication, and
demographics.
,Client's Income Needs - correct answer ✔✔Current income and the need for current income, if needs
are being met by current occupation.
Retirement - correct answer ✔✔When determining how to invest retirement funds, the advisor needs to
know the time horizon, the length of time the investor needs the money, how to ensure it will last the
length of the entire time horizon. Also important to know whether the client desires a high level
spending in retirement or to maintain their current spending in retirement. High level of
spending=aggressive investment while current level of spending=conservative investment.
Eventual Demise - correct answer ✔✔Clients can prepare for eventual demise by purchasing life
insurance and participating in estate planning, and possibility setting up a trust. Life insurance policies
can help beneficiaries cope with the loss of income caused by the death. Estate planning helps ensure
that the deceased's wishes are fulfilled with minimal loss of assets due to taxation and legal fees.
Disability - correct answer ✔✔Many investors experience disability at some point in their life, this can
involve loss of income, which can endanger assets that guarantee financial liabilities. Disability insurance
is a policy that helps the insured cope with the loss of income resulting from disability by providing
payments to the injured party, usually for a specific period of time.
Cash Flow - correct answer ✔✔The clients need for cash should be regularly discussed to ensure current
needs are being met and future needs will be met. Ensuring present and future cash flows should be
considered with every decision the client makes as it is part of the fiduciary responsibility of the advisor.
Investing Needs - correct answer ✔✔The client's balance sheet is a summary of the client's net worth as
related to their assets and liabilities. The advisor can use to balance sheet to determine the solvency of
the investor and make a suitable judgment as to their needs involving investing and financial planning.
Sheet can also be used to show why the advisor gives certain financial advice to the client.
Existing Investments - correct answer ✔✔The advisor needs to be aware of the investor's current
holdings. This helps to make more informed advice and decisions, while also ensuring that the investor is
receiving all the benefits that the current holding has to offer.
Tax Situation - correct answer ✔✔Every client has a different tax situation. Knowing the specific situation
is vital. It's important to know which types of investments are tax advantaged and which are not. It is
also essential to know the client's adjusted gross income and their respective tax brackets. If the client is
at the edge of a bracket, money can be rearranged to pay the smallest fee possible.
, Investment Advice - correct answer ✔✔Advice is dependent on what the investor seeks from investing:
maximum return on outlay of capital, or only investing in moral markets and companies. Also the
investor's background: investing experience, sophistication, and the investor's attitude toward current
world events and political environments.
Treasury Bills (T-bills) - correct answer ✔✔money market security: short-term debt issued by the United
States government; maturities of 1,3, or 6 months; denominations of $1000; greatest amount
purchasable at one time is $5 million; issued at discount to par and redeemed at par by the US gov; no
interest payments are made; interested rate earned is calculated by difference is price paid at issue and
price paid once redeemed; very safe and liquid; highly desirable; low rates of return
Treasury Notes - correct answer ✔✔medium-term debt obligations issued by the United States
government; maturity dates range between one and ten years; issued at a par value with a fixed rate of
interest; in the fixed income sector of the market; interest rate debt determined through a competitive
bidding process; high demand in the secondary market; very liquid
Treasury Bonds - correct answer ✔✔bear the longest maturity of any treasury security; issued at par
with a fixed interest; maturities of greater than ten years; fixed interest rate determined through a
competitive bidding process; backed by the full faith and credit of the US gov; some of the safest bonds
available
FNMA (Federal National Mortgage Association) - correct answer ✔✔government-sponsored, publicly-
traded company; goal to make homeownership possible for lower-income families; buys and guarantees
mortgages, creating mortgage-backed securities which are resold and tradable; relatively safe and very
liquid; desirable for several classes of investors
Treasury Inflation Protected Securities - correct answer ✔✔debt securities that are issued by the United
States government; inflation protected because they are indexed to the currency consumer price index
(CPI) to prevent loss of purchasing power due to inflation; the par value of TIPS increases each time the
CPI rises, while the fixed interest rate remains the same
Governmentally Backed Bonds - correct answer ✔✔bonds secured by a specific government's ability to
tax it's constituency; very safe, highly rated investment; risky investments are with an unstable region or
government
